Who wants elections now?

The challenges are manifold and the economy is on the threshold of a new era even though there is the unwanted conflict between those who would like to accelerate the pace of economic reforms and those who would like to see greater investment by the government in public sector. The need of the hour though is of political leaders who can resolve the conflicts and guide the country forward.

by BRIJ BHARDWAJ

Elections may be only one year away, but no group of parties or on its own seems to be ready to talk of winners or those who will be shown the door. The political groups are so unprepared that the move to redraw the political map by redefining the constituencies came as big relief to all of them. This virtually means that no poll can be held before middle of 2009. Political parties are just not ready for elections as they have no real issues to capture the imagination of people or an alternative agenda to offer.

The reasons for this are well known as country presents a mixed picture. The economy is moving ahead with record levels of growth which has been around 9 per cent every year and is not likely to fall despite fears of world-wide recession, and rising prices of food grains. The growth is not making all politicians happy because the gains of growth are being grabbed by a small section of population while large numbers living in rural areas continue to suffer and farmers as a group are suffering and in large numbers being forced to commit suicides.

Unfortunately there are no easy solutions for the problems facing India. There is also no unanimity on what needs to be done. If the Left parties had their way they would like to stop process of reforms, put new life into sagging public sector and keep foreign investors out. The pro-reform lobby on the other hand would like to carry on reforms process further, open banking and insurance sectors to foreign investment and reduce the role of the Government to being a market regulator instead of being an investor. Given the right atmosphere they would like to reach a stage where free convertibility of rupee becomes possible so that Indian economy gets integrated with world economy.

In keeping with Indian scenario, one can predict with certainty that the country will continue to follow a mix of policies. There will be no quick move to open doors so that foreign money can flow in heavy doses. On the other hand the public sector may not be wound up, but slow chipping is inevitable. Problems that we face today are that despite a big domestic market, the country can not help but export more and more as we have to pay huge bills for meeting our energy needs as well as technology. With trade growing India can no more allow inefficient units to continue. Our industry has to become competitive. We also have to take care of our growing population and turn the disadvantage of large number of mouths to feed into an advantage of providing them means to become productive.

It is a matter of some satisfaction that many of our industries are today competing with the best in world. All those who had predicted that Indian manufacturing sector will fold up have been proved wrong, but a lot needs to be done to raise our productivity levels to the world levels. To start with, we need to catch up with Asian region and subsequently to the levels of Europe and America. To sum up one can not help but suggest that our manufacturing sector needs to catch up with the standards set by services sector.

Most of the economic parameters can be met only if we maintain political stability which at present is under threat. The danger is posed by spread of violent movements led by Naxalites who are active in different States including Bihar, Jharkhand, Orissa, Madhya Pradesh and Andhra. It is an interesting mix as it includes progressive States like Andhra which is an important IT hub as well as many backward States. This clearly shows that distribution of income is as important as creation of wealth. How these differences can be resolved is not easy or possible in immediate future.

In the year to come we will see many compromises like limited encouragement to foreign investment, larger allocations for rural sectors and farmers, but delivery will remain an issue. There is also need for a new agriculture revolution as food prices are rising world-wide and there will be serious problems if production is not raised as even with all the money in our coffers including foreign exchange we may not be able to buy wheat or rice in world markets.

As such India will see possibilities of unexpected growth as well as shortfalls. These challenges need matured minds to tackle them. One hopes that our leaders will spend more time resolving economic challenges instead of giving all the attention to political issues which not only distract the attention of people but make the task more difficult. Even in a non election year, challenges are strong, but electoral considerations and populists policies will only make them more difficult.